Japan: Economy to grow 2.2% in next fiscal year, government says
Japan’s economy will grow 2.2% in the year starting April 2012 as the nation rebuilds after this year’s earthquake, the government forecasts. The estimate was released by the Cabinet Office in Tokyo yesterday. The government estimates that the economy will shrink 0.1% this fiscal year after the 11 March earthquake and tsunami devastated supply chains, the yen’s strength hurt exporters, and Europe’s debt crisis damped demand and confidence. The projected increase for next year is higher than is likely for any of the other Group of Seven nations in calendar 2012, according to Organization for Economic Cooperation and Development estimates. (Bloomberg)
India: ‘Fiscal Stress’ may worsen on subsidies, Reserve Bank says
India’s “fiscal stress” may deteriorate on widening subsidies and slowing taxes, the central bank said, signaling government spending and a weakening currency may keep inflation elevated. “The stress is likely to aggravate as the risks of fiscal slippage have increased during the current year,” the Reserve Bank of India said in its Financial Stability Report yesterday. Inflation holding above 9% all year has prompted the central bank to raise interest rates by a record pace before pausing monetary tightening this month. (Bloomberg)
EU: Greece’s creditors said to resist IMF push for more losses
Greece’s creditors are resisting pressure from the International Monetary Fund to accept bigger losses on holdings of the indebted nation’s government bonds, said three people with direct knowledge of the discussions. Lenders want the EUR70bn (USD91bn) of new bonds the government will issue in return for existing securities to carry a coupon of about 5%, said the people, who declined to be identified because the negotiations are private. The IMF is pushing for creditors to accept a smaller coupon in order to reduce Greece’s debt-to-gross domestic product ratio to 120% by 2020, a key element of the 27 Oct agreement by European Union leaders, the people said. (Bloomberg)
UK: Economic growth accelerates as BOE says surge won’t last
UK economic growth accelerated more than previously estimated in the third quarter in a surge that the Bank of England says is unlikely to be repeated as Europe’s debt crisis curbs bank lending and dents confidence. GDP rose 0.6% from the previous quarter, faster than the 0.5% reported last month, the Office for National Statistics said yesterday. The Bank of England, which has restarted bond purchases to aid the recovery, has said that the UK economy may fail to grow in the current quarter and the first part of 2012. In addition to turmoil in Europe, expansion in Britain may be restrained by unemployment at a 17-year high and the government’s ongoing fiscal squeeze. (Bloomberg)
US: Jobless claims fall, consumer comfort climbs
Fewer Americans than forecast sought jobless benefits and consumer confidence climbed, giving the world’s largest economy a boost heading into 2012. Unemployment claims fell by 4,000 to 364,000 in the week ended 17 Dec, the lowest level since April 2008, Labor Department figures showed yesterday. The Bloomberg Consumer Comfort Index improved to minus 45 in the period ended 18 Dec from a reading of minus 49.9 the prior week, marking the biggest seven-day gain since January. A decline in firings and the cheapest gasoline prices since February are helping revive retail sales during the busiest shopping season of the year. A stronger consumer, whose spending accounts for 70% of the economy, raises the odds the US can ride out the debt crisis in Europe or failure by Congress to extend tax cuts. (Bloomberg)
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